“Module 1: Options Basics – Learn Options Trading Step-by-Step (George Fontanills Style)”

 

🎓 Module 1: Options Basics

🎯 Learning Objectives

• Understand what options are and how they function
• Differentiate between calls and puts
• Interpret option terminology and contracts
• Recognize intrinsic vs. extrinsic value
• Understand time decay and expiration

🧠 What is an Option?

An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset...

💹 Basic Terminology

Term	Meaning
Strike Price	Predetermined price where the asset may be bought/sold
Premium	Price paid by the option buyer
Expiration Date	The last day the option can be exercised

⏳ Time Decay (Theta)

Options lose value as time passes — called time decay. ...

✅ Objective Questions

1. An option gives the holder the:
   a) Obligation to buy or sell
   b) Right but not obligation to buy or sell
   c) Obligation to receive dividends
   Answer: b
2. A call option gives the right to:
   a) Sell
   b) Buy
   Answer: b
...

🧾 Key Takeaways

• Options are asymmetric contracts...
• Time decay works against buyers...

Next Module ➜ Option Valuation & The Greeks